Ericsson CEO launches innovation centre in Melbourne

Ericsson has launched an innovation centre in Melbourne, with the CEO of the Swedish networking giant telling ZDNet that it is designed to drive technology development for both Ericsson and its partners.

The new innovation centre, part of the global Ericsson One program, will be used by smaller startups, entrepreneurs, universities, partners, and customers.

“This, for us, is very important global effort; we’re trying to drive innovation internally as well as externally, so this is part of that overall setup,” CEO Börje Ekholm said in an interview with ZDNet.

“We think ultimately it will be technologies that leverage connectivity … the connectivity, then we can help with massive connection of data, how do we process data, etcetera, but ultimately it will probably leverage some sort of connectivity as a basic feature.”

According to Ekholm, Ericsson chose Melbourne for the innovation centre due to the company’s long-term and “very important” partnership with Australian carrier Telstra.

“If we look globally on 5G, we see that we have announced a fairly large number of wins globally, and we see 5G being rolled out now in many places around the world … so we see Telstra as an early adopter of 5G,” Ekholm explained.

Ericsson and Telstra have partnered on more than 40 world firsts over the past 10 years, Ekholm said, with the two on Wednesday announcing a 5G partnership.

“Telstra is very early at adopting new technology, and earlier this year we did the first 5G data call on commercial equipment using commercial spectrum,” Ekholm told ZDNet.

“So that shows Telstra very early moving into 5G … it is a very early adopter in many ways, and a technology leader.”

Ericsson is also increasingly investing in 5G research and development (R&D), Ekholm said, having hired more than 3,000 engineers globally over the last year and a half in a bid to “strengthen our technology position in and lead in 5G”.

“That’s why it’s so important for us to also work with operators around the world who have the same ambition to lead development, so that is why it’s so important for us, for example, now to work with US operators, as they are deploying first in the world, but we also see that together with companies like Telstra, if we work with the early adopters we are also going to drive our technology better,” he explained.

Ericsson has thus far announced 5G partnerships with the four US operators, Swisscom, and Vodafone in addition to Telstra, with a number of additional contracts that have yet to be announced.

According to Ericsson Australia and New Zealand MD Emilio Romeo, Ericsson is already using the innovation centre to work on solutions for Australia’s National Broadband Network (NBN) company, on mining opportunities, and with partners Ciena and Telstra on transport.

Romeo confirmed that Ericsson is continuing to work with NBN on 5G, with Ekholm noting that all of Ericsson’s key customers are working on network evolution.

“We’re putting the solutions together, but it’s one of the big use cases for 5G, the industrial internet,” Ekholm said.

“So we will see if 5G being a key part of the factory infrastructure for smart manufacturing or industry 4.0 … we see that happening and getting very interesting feedback from companies, and the reason here is in a factory setting so far it’s mostly been Wi-Fi.

“A normal factory will have thousands of connections — that’s very hard to manage without interference in unlicensed spectrum. So we believe there is a lot of very interesting applications for 5G in industry factory automation, and that’s what we’re working together with Audi on.”

Also speaking with ZDNet this week, Telstra CEO Andy Penn agreed that 5G will be a better solution than Wi-Fi for smart factories and smart cities.

“The dynamic at the moment is that if you connect a lot of sensors to Wi-Fi — and you think about the number of sensors that will be connected in the future — ultimately, that’s not going to work because Wi-Fi uses unlicensed spectrum, and so you’re going to get too much interference and the performance is going to deteriorate,” Penn told ZDNet.

“So enabling 5G … is important as a potential technology to IoT — it takes all of that traffic onto licensed spectrum and addresses that issue. And smart cities is an important use case in the context of that.”

Ericsson had last week used its Q3 earnings report to say 5G is now a “commercial reality”, with enhanced mobile broadband and fixed-wireless as the first use cases.

Ericsson is also looking towards artificial intelligence and automation to push its business, as the company reported 54 billion Swedish kronor (SEK) (almost $6 billion) in net sales for the third quarter, up from 49 billion SEK in the same quarter last year.

Cost of sales for the quarter was 34 billion SEK, down from 36 billion SEK this time last year, while R&D expenses were down from 10.5 billion SEK to 9.4 billion SEK.

Total net income for the quarter was 2.6 billion SEK, an improvement on the 3.5 billion SEK loss this time last year, with net sales in its Networks division up by 13 percent year on year to 35.9 billion SEK.